The French major TotalEnergies has withdrawn from the project to build a polypropylene plant in Arzew, near Oran in western Algeria, in which it had committed under an agreement concluded in May 2018 with the Algerian state-owned company Sonatrach, relating to the launch of engineering studies for the said project.
According to the French media “Africa Intelligence” specializing in strategic information on Africa, TotalEnergies, which held 49% of the Arzew project against 51% for Sonatrach, already intended to withdraw in August 2022 from the Algerian megaproject, but it had postponed this decision so as not to spoil President Emmanuel Macron’s visit to Algiers, which he had started on August 25 of the same year, specifying, moreover, that the withdrawal of the French group is explained by “the lack profitability of Arzew, the attraction for the Gulf and the slowness of the government of Algiers”.
But after the end of the honeymoon a few months later, between Macron and his Algerian counterpart, Abdelmadjid Tebboun, the French group finally parted company with Sonatrach after having committed on December 15, 2022, to the more profitable project, d a planned polypropylene plant in Jubail, Saudi Arabia.
With a more substantial investment of 11 billion dollars, the Saudi project prompted the French group to abandon the Arzew project, which was much less profitable, and whose projected construction costs had meanwhile exploded by nearly 50%.
In addition, the Algerian project only represented an investment of around 1.4 billion dollars, split 51% for Sonatrach and 49% for TotalEnergies, and included a propane dehydrogenation plant (PDH) and a production of polypropylene (PP) with a capacity of 550,000 tons per year.
The abandonment of the Algerian project is also explained by the fact that TotalEnergie did not digest the refusal of the Algerian authorities to validate in 2019, the acquisition by the French group of the Algerian assets of Anadarko – acquired by Occidental Petroleum (Oxy), which only further strained relations between TotalEnergie and Sonatrach.
The gesture of the French group is not an isolated case in this Maghreb country where it is the military oligarchs who pull the strings of power in the shade. Many international companies, particularly in the automotive industry, after establishing themselves in Algeria, were quick to lift the veil because of bureaucracy, corruption and many other difficulties in making their projects profitable.
Moreover, the South Korean group Samsung, which was one of the three companies that submitted an offer for the Arzew project, withdrew because of the costs that had become out of control, probably due to inflation.
